In TradeZella's backtesting feature, you can simulate real trading strategies using three order types: market orders, limit orders, and stop orders.
You'll select your order type in the Order panel — click the Order button in the right-hand side navigation, then choose Market, Stop, or Limit before placing your trade.
This article explains how each order type works in the backtesting environment.
Order Types Explained Video Link: https://www.loom.com/share/bdaeef97ad374e90af018a413835d12b?t=113
Order Types Overview
How Do Market Orders Work?
A market order executes immediately at the current market price. This is the fastest way to enter or exit a trade, as it does not wait for the price to reach a certain level.
Example: If the current market price is $2.38, placing a market order will fill your order at that price.
If the price moves to $2.39 before execution, your order will be filled at $2.39.
How Do Limit Orders Work?
A limit order allows you to set a specific price at which you want to buy or sell, but it will only execute if the market reaches that price.
Buy Limit Orders: A buy limit order must be set below the current market price.
Example: If the market price is $2.38, you can set a buy limit order at $2.36. Once the price drops to $2.36, the order will be filled.
Sell Limit Orders: A sell limit order must be set above the current market price.
Example: If the market price is $2.38, you can set a sell limit order at $2.42. Once the price rises to $2.42, the order will be filled.
How Do Stop Orders Work?
A stop order is triggered when the market price reaches a specified level, at which point it becomes a market order.
Buy Stop Orders: A buy stop order must be set above the current market price.
Example: If the market price is $2.38, you can set a buy stop order at $2.46. Once the price rises to $2.46, the order will be executed as a market order.
Sell Stop Orders: A sell stop order must be set below the current market price.
Example: If the market price is $2.38, you can set a sell stop order at $2.34. Once the price drops to $2.34, the order will be executed as a market order.
What Happens If I Place an Order at the Wrong Price?
If you mistakenly place a buy limit order above the current market price or a sell limit order below the current market price, TradeZella will automatically convert them into stop orders to ensure proper execution.
Similarly, if you place a buy stop order below the current market price or a sell stop order above the current market price, TradeZella will automatically convert them into limit orders. This ensures that your orders are executed correctly based on the current market conditions.
For a full walkthrough of the Order panel, including Advanced Orders and position sizing, check out: Understanding the Backtesting Window
Understanding how market, limit, and stop orders work in TradeZella's backtesting helps you simulate real trading scenarios and refine your strategies.
If you have any questions or need assistance, feel free to reach out to our support team — we’re here to help!